Austrian Business Cycle explained in children's
toys

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In the ensuing economic and political turmoil, investors who are stil in the Pain of the bust.black chicken out and dump their Stagnant economy.holdings in favor of hard assets like gold, eliminating any hope for growth.Rising interest rates.Shrinking economy.Eventual y, the excess of paper money causes inflation of prices in consumer goods. In response, people shift away from their expensive homes and office buildings. The real estate market, built on paper, col apses like a house of cards.Mistakenly blaming businesses for bad investment decisions, the government sends forth armies of bureaucrats to implement new rules.The national central bank forces a lowering of the interest rate, al owing banks to print more paper money. This "Monopoly money" does not represent any real increase in wealth, but it looks like an increase to investors, who adjust their decisions.Investors with an influx of new funds are like kids with new toys. Feeling exuberant, they shift toward long-term, elaborate projects.Homes and office Fal ing interest rates.Peak of the boom.buildings become more Growing economy.Stagnant economy.impressive, and more valuable. This is cal ed a speculative bubble.

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An explanation of the Austrian Business Cycle theory in terms of children's toys... read more